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Executive Summary
This document contains the financial statements and supplementary data for the Borough of Middlesex, New Jersey, for the years ended December 31, 2016 and 2015. The report includes an independent auditor's report, financial statements for various funds, notes to the financial statements, required supplementary information, and supplementary schedules. The audit was conducted by Hodulik & Morrison, P.A., Certified Public Accountants, and Registered Municipal Accountants.
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--- Document: 2016 Middlesex Borough Municipal Audits Document --- BOROUGH OF MIDDLESEX COUNTY OF MIDDLESEX NEW JERSEY FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AND INFORMATION FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 WITH REPORT OF INDEPENDENT AUDITORS HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS HIGHLAND PARK, N.J. PART I BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) 1 2-4 Independent Auditor's Report Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards FINANCIAL STATEMENTS 5-6 7 A Current Fund - Comparative Balance Sheet - Regulatory Basis - December 31, 2016 and 2015 8 A-1 Current Fund - Comparative Statement of Operations and Change in Fund Balance - Regulatory Basis 9 A-2 A-3 B Current Fund - Statement of Revenues - Regulatory Basis Current Fund - Statement of Expenditures - Regulatory Basis Trust Fund - Comparative Balance Sheet - Regulatory Basis - December 31, 10 11-19 2016 and 2015 20 B-1 C Trust Assessment Fund - Statement of Fund Balance - Regulatory Basis General Capital Fund - Comparative Balance Sheet - Regulatory Basis 21 December 31, 2016 and 2015 22 C-1 D General Capital Fund - Statement of Fund Balance - Regulatory Basis Swimming Pool Utility Fund - Comparative Balance Sheet - Regulatory 23 Basis - December 31, 2016 and 2015 24 D-1 D-2 D-3 D-4 Swimming Pool Utility Operating Fund - Comparative Statement of Operations and Change in Fund Balance - Regulatory Basis Swimming Pool Utility Capital Fund - Statement of Change in Fund Balance Swimming Pool Utility Operating Fund - Statement of Revenues Swimming Pool Utility Operating Fund - Statement of Expenditures 25 26 27 28 NOTES TO FINANCIAL STATEMENTS 29-57 PART II – SUREQUIRED SUPPLEMENTARY INFORMATION 58 Sch. 1 Schedule of the Borough's Share of the Net Pension Liability (PERS) 59 Sch. 2 Schedule of the Borough Contribution (PERS) 60 Sch. 3 Schedule of the Borough's Share of the Net Pension Liability (PFRS) 61 Sch. 4 Schedule of the Borough Contribution (PFRS) 62 Notes to Required Supplementary Pension Information 63 BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PART III - SUPPLEMENTARY SCHEDULES Current Fund PAGE(S) 64 65 A-4 Schedule of Current Fund Cash A-5 Schedule of Petty Cash and Change Funds A-6 Schedule of Due from State of New Jersey - for Allowable Deductions per Ch. 73, P.L. 1976 A-7 A-8 A-9 Schedule of Sewer Flow Charges Receivable 66 67 68 Schedule of Property Taxes Receivable and Levy Analysis Schedule of Nonbudget Revenues & Various Accounts Receivables A-10 Schedule of Interfunds Receivable/Payable A-11 Schedule of SFY 2015 Appropriation Reserves A-12 Schedule of Property Tax Overpayments A-13 Schedule of Taxes Payable A-14 Schedule of Changes in Various Accounts Payables & Reserves A-15 Schedule of Local District School Tax - Deferred School Taxes A-16 Schedule of Deferred Charges A-17 Schedule of State Grants Receivable A-18 Schedule of Due from Current Fund - Grants Fund 69 70 71 72 73-78 79 80 81 82 82 83 84 A-19 Schedule of Reserve for State Grants - Appropriated 85-86 A-20 Schedule of Reserve for State Grants - Unappropriated 87 A-21 Schedule of Due from General Capital Fund - Grant Fund 87 Trust Fund 88 B-2 B-3 Analysis of Trust Assessment Cash and Investments Schedule of Assessment Liens 89 89 B-4 Schedule of Due to General Capital Fund - Assessment Trust Fund 90 B-5 Schedule of Due to Current Fund - Assessment Trust Fund 90 B-6 Schedule of Cash and Reserve Activity 91-92 General Capital Fund 95 C-2 C-3 Schedule of General Capital Cash and Investments - Treasurer Analysis of General Capital Cash and Investments 96 97 C-4 Schedule of Various Grants, Loans, and Other Receivables 98 C-5 C-6 C-7 Schedule of Deferred Charges to Future Taxation - Funded Schedule of Deferred Charges to Future Taxation - Unfunded Schedule of Interfunds 99 100 101 C-8 Schedule of Improvement Authorizations 102 C-9 Schedule of General Serial Bonds 103 C-10 Schedule of Capital Leases Payable - MCIA 104 C-11 Schedule of Loans Payable - New Jersey 1987 Green Trust Fund 105 BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS Swimming Pool Utility Fund Cont'd.) PAGE(S) C-12 Schedule of Loans Payable - New Jersey Green Trust Fund - 1989 106 C-13 Schedule of Various Reserves 107 C-14 Schedule of Reserve for Capital Improvement Fund 108 C-15 Schedule of Loans Payable - NJ Environmental Infrastructure Trust Loan and Fund Loan Payable 109 C-16 Schedule of Bonds and Notes Authorized but not Issued 110 Swimming Pool Utility Fund 111 D-5 Schedule of Swimming Pool Utility Cash and Investments - Treasurer 112 D-6 Analysis of Swimming Pool Capital Cash and Investments 113 D-7 D-8 Schedule of Miscellaneous Receipts - Swimming Pool Utility Operating Fund Schedule of Fixed Capital - Swimming Pool Utility Capital Fund 114 115 D-9 Schedule of Fixed Capital Authorized and Uncomplete 115 D-10 Schedule of Accounts Payable - Swimming Pool Utility Fund 115 D-11 Schedule of 2015 Appropriation Reserves 116 D-13 Schedule of Interfunds Receivable/Payable D-15 Schedule of Reserve for Amortization D-12 Schedule of Reserve for Snack Bar Operations D-14 Schedule of Capital Improvement Fund D-16 Schedule of Deferred Reserve for Amortization D-17 Schedule of Due to Swimming Operating Fund D-18 Schedule of Improvement Authorizations D-19 Schedule of Bond Anticipation Notes D-20 Schedule of Accrued Interest in Bonds and Notes D-21 Schedule of General Serial Bonds D-22 Schedule of Bonds and Notes Authorized but not Issued 117 118 119 119 120 120 121 122 123 124 125 PART IV - SUPPLEMENTARY DATA 126 Combined Balance Sheet - All Funds for the Year Ending December 31, 2016 Comparative Statement of Operations - Change in Fund Balance - Current Fund Comparative Statement of Operations - Change in Fund Balance - Swimming 127 128 Pool Utility Operating Fund 129 Comparative Schedule of Tax Rate Information 130 Comparison of Tax Levies and Collection Currently 130 Delinquent Taxes and Tax Title Liens 131 Property Acquired for Tax Title Lien Liquidation 131 Comparative Schedule of Fund Balances 131 Officials in Office and Surety Bonds 132 PART V - GENERAL COMMENTS AND RECOMMENDATIONS 133 General Comments 134-141 Recommendations 142 BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY PART I INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTS -1- BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY ANDREW G. HODULIK, CPA, RMA, PSA ROBERT S. MORRISON, CPA, RMA, PSA HODULIK & MORRISON, Ρ.Α. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ 08904 (732) 393-1000. (732) 393-1196 (FAX) INDEPENDENT AUDITOR'S REPORT MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIETY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. Honorable Mayor and Members of the Borough Council Borough of Middlesex County of Middlesex, New Jersey Report on the Financial Statements We have audited the accompanying balance sheets - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey, as of and for the year ended December 31, 2016 and 2015, the statements of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the basic financial statements of the Borough as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error or fraud. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. -2- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles are designed primarily for determining compliance with legal provisions and budgetary restrictions, and as a means of reporting on the stewardship of public officials with respect to public funds. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Borough of Middlesex, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. The financial statements - regulatory basis referred to in the first paragraph do not include the Statement of Governmental Fixed Assets, which should be included to conform with the basis of accounting described in Note 2. The amount that should be recorded for Governmental Fixed Assets is not known. Opinion on Regulatory Basis of Accounting In our opinion, except for the effect on the financial statements of the omission of the Statement of Governmental Fixed Assets, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds of the Borough of Middlesex, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the results of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that pension plan information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. -3- Other Information Our audit was made for the purpose of forming an opinion on the financial statements of the Borough of Middlesex, County of Middlesex, New Jersey. The information included in Part III Supplementary Schedules and Part IV Supplementary Data, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements of the Borough of Middlesex, County of Middlesex, New Jersey. The Part III - Supplementary Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements, or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and in our opinion, the information is fairly stated, in all material respects, in relation to the financial statements - regulatory basis taken as a whole. The schedules and information contained in Part IV - Supplementary Data have not been subjected to auditing procedures applied in the audit of the financial statements and, accordingly we do not express an opinion, or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated September 18, 2017 on our consideration of the Borough of Middlesex's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Borough of Middlesex's internal control over financial reporting and compliance. Hodulik & Morrison, Р.А. HODULIK & MORRISON, P.A. Certified Public Accountants Registered Municipal Accountants Andrew G. Hodulik Registered Municipal Accountant No. 406 Highland Park, New Jersey September 18, 2017 -4- ANDREW G. HODULIK, CPA, RMA, PSA ROBERT S. MORRISON, CPA, RMA, PSA HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ 08904 (732) 393-1000 (732) 393-1196 (FAX) MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIETY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
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"...Taxes and Tax Title Liens 131 Property Acquired for Tax Title Lien Liquidation 131 Comparative Schedule of Fund Balances 131 Officials in Office and Surety Bonds 132 PART V - GENERAL COMMENTS AND RECOMMENDATIONS 133 General Comments 134-141 Recommendations 142 BOROUGH OF MIDDLESEX MIDDLESEX COUNTY, NEW JERSEY..."
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